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The start point for the best source of fleet information |
Fuel is not getting any cheaper, regardless of which type it happens to be. There are plenty of things a driver can do to slash the amount they use but, short of a petrol or diesel home-brew kit, your average employee is at the mercy of their nearest forecourt.
It is tempting to think the same about electricity. It comes out of a socket or charge point, and however much your supplier says it costs is what you pay. Businesses can take matters into their own hands though. We are going to sidestep the 'it costs drivers more to charge electric cars' thing for now, because we have covered that previously and will return to it. Here, we are concerned with how organisations can reduce their on-site energy costs in the face of rising prices and gear themselves up for cheaper and more effective EV charging, as more plug-in vehicles join their fleets. You might even tidy up a few other electrical drains while you are at it.
This does not start with cars or with charge points, rather with an understanding of exactly how much energy a site uses, what it is using it for, and when. That usually involves an audit, and a good one will illustrate exactly how much you spend on energy down to the half-hour, then explain what you can do to change things for the better. If you are wasting energy (like leaving lights/fans/heating systems on overnight for no reason), this will flag it up and show you how to make a quick and easy clawback.
The best move after the audit is often to change the tariff. Though most of us have been led to believe that fixed-price contracts for more or less anything are the way to go, it is often beneficial to switch to a pass-through contract with flexible purchasing, because this better reflects the true cost of energy usage.
"There are about 30 different charges to deliver electricity to a meter, and on a pass-through contract, they all get passed through at cost. You can validate it and there's nowhere for the supplier to hide any extras," says Mike Davies, managing director of ClearCost Energy, which specialises in helping businesses identify and reduce their energy spend.
"Although commodity prices have increased dramatically, so has the difference between maximum and minimum values within a day. Typically, before Covid-19, you were looking £25-ish per megawatt-hour difference in the summer and £30-ish over the winter. Last winter, it was over £200, and this summer, nearly £150. You're better off paying £200 a megawatt hour than £500.
"Because the energy is traded in half-hour periods, there will be periods - even this year - where it's negative pricing, because there's too much energy on the system, so you're paid to consume [but] it's not every day."
Flexible purchasing contracts shift the financial risk associated with consumption from the supplier to the user and can be beneficial for businesses willing to manage their own costs, especially those investing in on-site clean energy initiatives, such as battery storage systems and solar panels, which are often used to compliment EV charging. By contrast, fixed-price energy tariffs do not reward the installation of such systems and, as Davies puts it: "The only one who benefits is the supplier."
This is usually the point at which new bits of kit crop up. Building management controls, solar panels, battery storage systems and their ilk do not typically come cheap but, when they are well implemented, they can be more than worth the outlay. Supply of solar and battery components is lean and demand is high (think electric cars and semiconductor and raw material supplies) so getting hold of them could take a while, but at today's - and the foreseeable future's - energy prices, the average payback time for such equipment has shrunk from around eight-to-10 years to one-to-three years, according to Davies.
Timing energy consumption is equally important and, although it applies to everything, this is where electric vehicle charging starts to come into the equation. You do not want to be juicing up EVs when power is at its priciest (Business Car's interview with charging specialist Ohme in our August issue covers this in detail) so at the very least, it is worth explaining as much to employees.
More effective is a smart charging system, which would allow the business to control exactly when EVs are powered up to exploit the lowest rates. Overnight is always best (precise hours can vary but some chargers are clever enough to kick in at the cheapest times) and charging a vehicle up to 80% but no further is a recipe for a long battery life (again, more sophisticated chargers can account for this) so why exceed that if there is no need?
"With delivery vehicles, you could say that you want them to be available at 6am," says Davies, "they do the first batch of deliveries and come back at 10am, which just happens to coincide, usually, with a dip in the wholesale commodity price. The highest peak is normally 4pm to 7pm, but the next highest is 7am to 9am, then lunchtime is another minor one. If you want to top up the charge, then mid-afternoon is a good time to look at it if you've got the right contract. Then, if you've got solar panels, is the forecast tomorrow sunny? If it is, charge up your vehicles."
Get this right - in tandem with your overall energy consumption - and you could even get a kickback from your energy supplier. Davies explains: "There are different services that you can buy into, particularly with National Grid. There's one at the moment, right down to domestic level, which is that your electricity supplier will tell you - probably the day before - that there's going to be one or more half-hourly periods the next day when you'll get paid as much as £3 per kilowatt hour if you reduce your consumption.
"It's all about the supply being tight over the winter. If National Grid pays for coal stations that were going to be shut down to stay online, then there's a cost associated with it - it's trying to avoid that. If, say, it's a very cold winter, French nuclear stations fall off and there's a shortage of gas, then the lights might go out. So National Grid says, 'OK, it's a tight margin forecast for tomorrow because there's not much wind,' you then say, 'well, I get paid £3 a kilowatt hour for not using kilowatt hours - fantastic'. They say it will generally be between 4pm and 9pm on weekdays over the winter."
Regulatory changes from April 2023 are also worth knowing about, because they could lead to energy price rises of tens or hundreds of thousands of pounds per site. The Targeted Charging Review - an Ofgem initiative designed to democratise energy transmission and distribution charges - will introduce a billing model that charges users based on their available supply capacity. This is expected to increase costs for typically larger businesses that engage in 'load-shifting' - reducing periods of maximum energy demand to lower their bills.
"An extreme example I saw was a limestone and cement manufacturer," explains Davies, "at the moment, their costs would be around a quarter of a million pounds for these peak periods on a single site. From next year, it'll be over a million pounds as a fixed cost."
According to Davies, businesses could avoid such increases by asking their distribution network operator (DNO) to reduce their available capacity, which is usually greater than their typical maximum energy usage. This can be done once a year and previously incurred the risk of high costs if the capacity later needed to be increased to its original level.
"What the DNOs are saying is that, under the new rules, as long as nobody else has used that capacity, the cable in the ground has not changed, you can have it back for free and you won't end up with a bill of £100,000," he adds.
He acknowledges that reducing capacity is not easy when fleets are increasing adopting electric vehicles, but it is worth considering as part of broader efforts to cut energy costs. Done properly, a series of considered efforts to reduce a site's energy consumption and gear it up for the exact type of EV operation can save a packet, as was the case with one of his fleet clients.
"We went through what happens if you put solar panels on [the building] and battery storage. Then we did a section on the cost implications of introducing EV charging and the strategy for charging them. It depends on whether you're just having an ad-hoc charging system with AC charging points where people turn up and plug in when they fancy it, or if you have something more structured [i.e. smart charging]. what we care about is minimising the cost. We did all that and found that the difference between charging at night and charging during the day was, at the time, more than 10p a kilowatt hour difference [around £40,000 per year]."
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